Minnesota Ponders Ways To Revamp Finance System

Spurred in part by the financial troubles of several districts where
voters rejected tax proposals, the Minnesota legislature is expected to
consider ways to revamp the state's school-funding scheme.

A group of business leaders, politicians, parents, and others
brought together by the legislature released a proposal last month. The
Minnesota Education Association and another task force made up of
lawmakers are working on plans of their own.

These groups generally agree that the state should pay a greater
share of education costs. The state nearly froze funding for its
school-aid formula in three of the past four years, and a last-minute
change to a 1993 education bill capped spending on programs such as
special education and transportation.

Union officials and others have also called for revamping the
property-tax system, which they say creates confusion and inequity by
taxing property at different rates depending on its value.

"It's so complicated no one understands why their taxes go up but
they don't see an increase in services," said Judy Shaubach, the
president of the Minnesota Education Association.

But officials in Gov. Arne Carlson's office said he has not lined up
behind any finance proposal. And the Governor made no mention of the
finance issue in his State of the State speech last week, saying only
that Minnesota was already spending a big chunk of its money on
schools.

"Today, more than half of the state budget is returned to local
governments; nearly all of the remainder is returned to people in the
form of human services, health care, and education," he said. "All of
us can be more efficient."

The Governor also said that he favors using more block grants to
allow communities to make their own decisions about how to spend
money--an idea that was also popular among the panelists who were
appointed by the legislature.

Some school officials have expressed fear that changes in the system
will not come soon enough--if they come at all.

The White Bear Lake school district, for instance, is expected to
cut $4 million from next year's $40 million budget because a referendum
seeking to extend last year's increase in property-tax rates failed.
The cuts would be added to $3 million in reductions made this year by
the 10,000-student district, located in a suburb of St. Paul.

Fair Share

The Coalition for Education Reform and Accountability, created by
the legislature in 1993, released its first report last month,
recommending that the state provide enough aid to pay for a "core
education" in each district.

The money would be distributed through block grants that would free
districts from most state mandates but require that schools meet
performance standards. The group would also like to see the state take
responsibility for support services like special education and Head
Start.

The coalition also recommended allowing local school boards to
increase tax rates by as much as 25 percent without holding a
referendum, and to levy local income taxes.

Like the teachers' union, it said the property-tax system is
"unnecessarily complex" and favors districts with high property
values.

The M.E.A., which also has a representative in the coalition, is
also pushing for a change in the relationship between property taxes
and state aid to local governments. A consultant who reviewed the issue
for the union noted in his report that it produces "strange variations
in property-tax burdens from community to community."

"We don't believe the property tax itself is bad, but the system is
flawed," said Ms. Shaubach, who said the union was weighing the
consultant's suggestion for a one-class property tax at the local
level.

The union is now talking with lawmakers "to see where the political
will is," Ms. Shaubach added.

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